July has been filled with lots of talk on tax in regards to telecom operations. From the start of the month, there has been an effect on mobile money transactions as a result of the mobile money tax imposed, and on social media usage following the implementation of the OTT tax.

With the public up in arms against the cause, including the trending #ThisTaxMustGo call, the Ugandan Government has responded by scrapping all tax on receiving money, sending money, and making payments; while cutting that on withdrawals of money down to 0.5%.

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The Minister of ICT and National Guidance, Frank Tumwebaze stated that the goal of retaining the tax on withdrawals is to discourage cash-to-cash transactions while promoting cashless transactions – a possible growth of the ICT sector.

“When they talk about mobile money tax on withdrawals, just understand that there is no tax on sending… It means the Ministry of Finance is fighting cash outs and pay outs. The withdrawal is for those craving for paper cash. The 0.5% is for those hell bent on carrying physical cash.”

He states that there is hope for mobile wallet development, with more payment wallet platforms innovated.

Possible Refund?

In response to some of the critics of his message on the Mobile Money tax, the President recently made a directive that all those that had been affected by the tax on deposits, sending and withdrawal at 1% should have their 0.5% refunded because the earlier cabinet settlement was at 0.5%.

Minister Tumwebaze states that this refund will be effected only after the ammendment of the Excise Duty Act in Parliament, which the Ministry of finance and the office of the Attorney General have been tasked to

OTT tax to stay

The tax on social media usage will not be scrapped or even be cut, according to the minister. He states that the implementation of the Excise duty on OTT at UGX 200 per day of access will continue, as further improvement to the payment options are discussed with the telecom companies.

The Uganda Communications Commission had (two weeks back) stated in a tweet that they plan to meet with Uganda Revenue Authority, telecoms and the Ministry of Finance within a fortnight to evaluate the progress of Social Media Tax. We can’t tell whether this is their stand as well, but can’t have any more hope.